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Research says Amazon, Google will go on big spending sprees this year

Amazon, Google and Facebook will go on a capex spending spree, according to a report by Jefferies. (FactSet/Jefferies)

Despite their dominance, Amazon and Google aren't sitting on their hands this year when it comes to capex spending, according to recent research.

Amazon is planning on spending $28 billion on capex this year, according to research by Jefferies, plus another $26 billion for research and development. While Amazon is the leader of the pack for capex and R&RD spending, Alphabet/Google is second with a planned capex spend of $23 billion and an R&D budget of $21 billion.

Amazon and Google's capex and R&D budgets are somewhat akin to Arnold Schwarzenegger's use of steroids back in his body building hey day: He probably didn't really need them, but they did make him bigger.

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Coming in third-place was Facebook with a "measly" $15 billion in capex, which was similar in size to Apple. Facebook's capex growth was the highest in the report at 123%. The report speculated that Facebook's jump in spending could be related to unannounced new products and services.

"We are skeptical that Facebook can spend $15 billion, even with the expansion of video content and international data centers," the report said.

Across the public cloud sector, Google and Amazon will each spend more than double the amount that Microsoft will spend and 10 times more than Oracle, with the caveat that not all capex spending was for public cloud infrastructure, according to the report.

Jeffries analyst Brent Thill wrote in his industry research note that the large capex and R&D investments were long-term positives for Amazon, Google and Facebook. Some of the beneficiaries of that spending along the supply chain included Ciena, Nvidia, Advanced Micro Devices, Palo Alto Networks and Check Point.

Capital expenditure growth is accelerating to 47%—compared to 26% a year ago—to $93 billion while R&D is also nearing $100 billion this year, which would double the amount spent three years ago on R&D.